U.S. biotech firms representing a variety of industries are working to ward off efforts by India, Brazil and other developing countries that want to amend World Trade Organization rules to require patent holders to disclose the origin of their patents and share benefits when those patents are based on genetic plant material or traditional knowledge from developing countries. Failure to meet these new rules would result in the loss of patents if these changes to WTO rules were approved.

The firms expect to create an education campaign this spring to build opposition among other WTO members to demands from India and Brazil, and argue that developing countries could actually be disadvantaged by such rules. In addition, the group hopes to find allies within India’s biotech industry, which also could be disadvantaged by the new requirements, they said. This could include Indian companies making patented health care and personal grooming products based on ayurveda, or Hindu traditional medicine.

The U.S. biotech firms have been brought together under the recently formed American BioIndustry Alliance, which includes pharmaceutical companies Merck, Pfizer, Bristol Myers-Squibb and Eli Lilly, as well as General Electric and Procter & Gamble. The membership of companies not strictly in pharmaceuticals shows the issue is important to firms beyond the drug industry, industry sources said. Procter & Gamble, for example, is chiefly interested in how new WTO rules requiring benefits sharing and disclosure of origin could adversely affect its skin care products, an industry source said.

The goal of the group is to prevent such requirements from being incorporated into the WTO Agreement on Trade-Related Aspects on Intellectual Property Rights, as demanded chiefly by Brazil, India and Peru. At the December 13-18 WTO ministerial in Hong Kong, those countries successfully negotiated language into the final ministerial text that calls for the WTO director general to intensify his consultations on all outstanding implementation issues, including the relationship between TRIPS and the Convention on Biological Diversity, which covers the use of biological materials.

Paragraph 39 also calls for the WTO General Council to review progress and “take any appropriate action” no later than July 31, 2006 on the implementation issues. Implementation refers to issues during the Uruguay Round that developing countries argue were not effectively implemented, but the only two issues specifically highlighted in paragraph 39 are the traditional knowledge and genetic material issue, and the European Union’s demands for protections for foods with geographic names or indications such as Parma ham. Some fear the EU may ultimately support talks on negotiating new rules on the use of traditional knowledge and genetic material if this also allows the GIs issue to move.

U.S. firms would have preferred to see language calling for open-ended consultations rather than a date indicating some decision could be made by this summer, sources said. However, one industry source said open-ended language was too much to expect given the push by Brazil and India for an endorsement of talks on amending WTO rules to be included in the ministerial text. At the same time, the source acknowledged it would be better to have more than six months to consult with other WTO members and potential allies in India as a way to counter the current demands from India, Brazil and Peru.

The July 31 date corresponds to deadlines for members to submit comprehensive draft schedules of commitments in agriculture and industrial market access, although this depends on members meeting a separate deadline agreed in Hong Kong to establish specific negotiating terms or modalities in those areas by April 30. Still, it is conceivable that Brazil and India could use the deadline on these schedules as leverage to win concessions on the TRIPS issue.

However, U.S. industry sources indicated they are hopeful of softening the position of India, which in Hong Kong indicated to the U.S. that its position was based on domestic political reasons, and that its biotechnology and pharmaceutical industry had not raised its voice on the issue, sources said. The ruling party in India shares power with several minority parties, including the Communists, who support introducing WTO requirements for benefits sharing and origin disclosure.

As a result, industry sources said it could be possible to get India to lower its demands if industry groups in that country announced their opposition to rules that would threaten to invalidate a patent if a patent holder failed to share benefits or disclose the origin of related traditional knowledge or genetic material. These sources indicated U.S. groups would reach out to potential supporters in India in the hopes of changing the dynamics there.

Such a scenario, however, is unlikely with Brazil, which is seen as more interested in advocating fundamental changes to TRIPS, sources said.

The alliance will argue to developing countries that creating a mandatory patent disclosure obligation would make it less likely that industry would invest in bio-prospecting in developing countries, which would add to uncertainty in the bio-industry and make it less likely that genetic resource inventions would become commercially viable. This would go against the interest of countries rich in traditional knowledge and genetic material, since these countries would not get to share in any benefits unless products appear on the market.

Determining where genetic material comes from can also be complicated, and is another reason why linking patents to disclosure or benefit sharing would be a bad idea, the alliance argues. For example, questions could be raised about the origin of bio-materials found in the Brooklyn Botanical Garden. Another possible complication could occur if a company disclosed that the country of origin for its material was India, but it turned out the same material could be found in, for example, China. This could lead to conflicts over how benefits should be shared among various countries.

U.S. firms and the U.S. government have advocated a contractual system for sharing benefits, and have urged members to reject a linkage between patents and benefit sharing, these sources said.

Finally, the alliance argues the goals that would need to be captured in an international regime on access and benefit sharing related to genetic resource inventions go beyond the expertise of the WTO TRIPS Council. It argues the better forum for an agreement would be under the Convention on Biological Diversity, which the U.S. has not ratified. There is also no dispute settlement mechanism under the CBD.

Stephanie Weinberg
Trade Policy Advisor
Oxfam America

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